NewsGlobalGlobal Capital Shifts from China to India as Geopolitics Reshape Investment Flows: Kedaara CapitalGlobal Capital Shifts from China to India as Geopolitics Reshape Investment Flows: Kedaara Capital
Kedaara Capital's Manish Kejriwal at Davos 2026 highlighted India's emergence as a preferred investment destination as global capital reallocates from China due to geopolitical changes and poor returns. While currency depreciation affects foreign investors, pan-Asian funds are increasing India allocation, making larger deals more expensive. Valuations remain the primary constraint in deal-making despite strong investor appetite, with increased exit activity and robust domestic IPO flows driven by SIP money creating sustainable market strength.
*this image is generated using AI for illustrative purposes only.
At the World Economic Forum in Davos 2026, India's investment landscape took center stage as global capital flows undergo significant reallocation. Manish Kejriwal, Founder and Managing Partner of Kedaara Capital, highlighted the country's emerging role as a preferred investment destination during an exclusive interview with CNBC TV18.
Geopolitical Shifts Drive Capital Reallocation
Kejriwal emphasized the transformative impact of changing geopolitics on global investment patterns. He referenced Mark Carney's concept of middle powers coming together, stating that the world is moving toward a new type of multipolarity. According to Kejriwal, Trump's America First policies have created space for other nations to regroup, with middle powers outside China, Russia, and the US finding common ground for collaboration.
"There is a significant change in geopolitics. The middle powers should be doing something together, not to fight against, but just to regroup," Kejriwal explained. He noted that while Trump focuses on bringing jobs back to America, the rest of the world has opportunities to chart its own course.
India Benefits from China Capital Exodus
The investment veteran highlighted how capital previously directed toward China is now pivoting to India. Despite ongoing challenges with currency movements, where the rupee's depreciation exceeds the typical 3.00% to 5.00% annual assumption, India's fundamental investment story remains compelling.
| Investment Flow Dynamics: | Details |
|---|---|
| Currency Impact: | Rupee depreciation above 3-5% annual assumption |
| China Challenges: | Lack of DPI and returns driving capital exodus |
| Pan-Asian Funds: | Increased allocation to India |
| Deal Competition: | Larger deals becoming pricier due to capital influx |
"Given what's happening in China and the lack of DPI and returns there, that money is pivoting away from China. As far as pan-Asian funds are concerned, there's more money coming into India," Kejriwal observed.
Valuation Concerns Shape Deal Activity
While investor appetite for India remains strong, Kejriwal identified valuations as the primary constraint in current deal-making. The past two years have witnessed increased exit activity, creating a robust GP-to-GP transaction market that shows no signs of slowing down.
| Deal Market Dynamics: | Current Status |
|---|---|
| Primary Constraint: | Valuation levels |
| Exit Activity: | Significant increase over last two years |
| GP-to-GP Transactions: | No slowdown observed |
| Investment Strategy: | Accelerated exits, cautious entry valuations |
"Most of us tend to push the accelerator on exits and pull back a little on entry valuations," Kejriwal explained, highlighting the strategic approach private equity firms are adopting in the current environment.
Domestic Capital Drives IPO Strength
Kejriwal emphasized the resilience of India's IPO market, which operates independently of foreign capital flows. The strength comes from systematic investment plan (SIP) money and domestic capital, creating a sustainable foundation for public market activity.
"The strength of the IPO is not dependent on foreign capital. It's benefiting from all the SIP money and all the domestic money," he noted. Kejriwal characterized retail equity market participation as being at the tip of the iceberg, representing a secular flow that will continue expanding.
Sectoral Opportunities and Promoter Behavior
The investment landscape shows evolving patterns in promoter behavior, with selling stakes now viewed as strategic rather than shameful. Kejriwal identified key sectors driving opportunities:
- Financial Services: Primary focus area
- Consumer Sectors: Dominant investment theme
- Technology Services: Continued opportunities
- Healthcare: Growing potential
"What used to be a sort of sign of shame by selling out is now almost regarded as a sign of smartness. I see a significant amount of first, second, third generation business selling," Kejriwal observed.
Despite the positive outlook, Kejriwal highlighted quality concerns regarding teams, management, and ethics as key considerations for investors navigating the evolving market landscape.
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